Labour: Use wood, or face questions

VERNON SMALL
Last updated 11:53 19/03/2014

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Labour is promising tax breaks for wood processors as part of its package to boost the forestry and timber sector.

Finance spokesman David Parker said an incoming Labour government would offer accelerated depreciation that would attract an estimated $40 millon to $80m a year in capital expenditure in forest processing.

The deferred tax payment approach is essentially an interest-free loan.

The estimated annual cost of the incentives in the sector is $10m to $25m.

The plan was outlined in leader David Cunliffe's speech to the Forestwood conference in Wellington today.

The accelerated depreciation would "go beyond the 20 per cent firms could access before 2010" when National removed it, Cunliffe said.

Tax breaks were a key recommendation of the Opposition's multi-party manufacturing inquiry.

Labour plans to announce accelerated depreciation for other sectors as it rolls out its tax and economic "upgrade" policies.

The tax break for forestry would run alongside a "pro-wood" procurement policy for government-funded buildings up to four storeys high. It would require departments to "please explain" if they chose other products when there was a wood option.

Labour would also reintroduce research and development tax credits and ensure public science worked to further develop wood-plastic composites.

It would also provide suspensory loans repayable on harvest to cover the cost of new planting.

Iwi forestry clusters would be helped to analyse options for their land, with $2m earmarked for each successful project.

Labour would also establish a forestry task force, costing $5.2m, and plans to create "legacy forests" that would protect, improve and expand indigenous forest cover at a cost of $2.5m over four years.

Another $4m a year will be allocated to improving regional roads and tracks used by foresters.

Parker said Labour wanted to partner with industry to ensure more output from forestry moved up the value chain.

"Today's policies represent a major step in achieving that ambition," he said.

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